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ESTATE EDITH HOFFMAN v. J. RALPH HOFFMAN (05/26/83)

submitted: May 26, 1983.

ESTATE OF EDITH HOFFMAN, DECEASED, APPELLANT,
v.
J. RALPH HOFFMAN



No. 582 Pittsburgh 1982, APPEAL FROM THE ORDER OF APRIL 22, 1982 IN THE COURT OF COMMON PLEAS OF ALLEGHENY COUNTY, CIVIL NO. GD 78-30263 C SUR JO. NO. DSB 208 APRIL TERM, 1974

COUNSEL

Henry M. Horvat, Jr., Pittsburgh, for appellant.

Thomas P. Geer, Pittsburgh, for appellee.

Cavanaugh, Rowley and Cirillo, JJ.

Author: Cirillo

[ 321 Pa. Super. Page 508]

The Estate of Edith Hoffman seeks to collect on a judgment note issued by Edith's former husband, Ralph Hoffman. A resolution of the issues turns upon a series of financial transactions between the Hoffmans.

In August 1971, Edith and Ralph purchased a tavern for $135,000.00. The land, valued at $100,000.00, was titled in both names; the business and liquor license, valued at $35,000.00, were titled exclusively in Ralph's name. To finance the purchase, Ralph and Edith jointly gave a $65,000.00 mortgage for the land, and Edith supplied the $70,000.00 balance from her own resources. Edith's funds apparently paid for the $35,000.00 cash payment on the land and Ralph's business and liquor license. To compensate Edith for his interest in the property, his portion of the closing costs, and the business and liquor license, Ralph issued the $54,947.38 demand judgment note presently before the Court.

One year later, the parties sold the tavern for slightly less than their purchase price. In that transaction, the buyer assumed the $65,000.00 mortgage on the tavern, with the Hoffmans pledging their marital abode to the mortgagee as additional collateral. The two took from the buyer a $40,000.00 second mortgage with monthly payments over a five year period of $792.84. They also received a cash payment of $20,823.77 in the form of a check which was deposited in one bank and immediately paid out to another bank for the purchase of a certificate of deposit in the name of "Mrs. Edith Hoffman, in trust for John Ralph Hoffman."

[ 321 Pa. Super. Page 509]

"One who deposits money in a savings account in [her] own name in trust for another establishes a totten trust." In re Estate of McFetridge, 472 Pa. 546, 550, 372 A.2d 823, 825 (1977). See 20 Pa.C.S. 6304(b). By creating a Totten trust, Edith retained complete control of the funds and could revoke the trust at will. If she did not revoke the trust, any balance in the account at her death inured to Ralph. McFetridge, supra.

From November 1972 until November 1977, payments for the second mortgage were sent to the Hoffmans. Ralph received the first seven payments, amounting to $5,549.88. Ralph and Edith jointly received the next six, amounting to $4,757.04. Edith received the remaining forty-seven, amounting to $37,163.48.

In January 1974, the judgment note was filed and judgment confessed.

In December 1975, Ralph deeded to Edith his interest in the marital property. Edith sold the property one year later for $47,500.00, and after satisfying the mortgage and paying closing costs she received net proceeds of $32,000.00. To satisfy the mortgagee's continued request for collateral on the tavern mortgage, Edith placed these proceeds, along with an additional $8,000.00, into another Totten trust with Ralph as beneficiary.

Finally, in June 1978, Ralph divorced Edith and one month later Edith died. Edith's estate then sought execution on Ralph's note, and Ralph succeeded in opening judgment. In its opinion, the lower court found that the transactions outlined above were relevant to the value of the judgment note and reduced Ralph's balance on the note to $7,000.00.

The trial court reached its award by the following calculations.*fn1 Since Ralph's interest in the tavern amounted to $50,000.00 in the land plus $35,000.00 in the business and liquor license, his $85,000.00 portion in the $135,000.00

[ 321 Pa. Super. Page 510]

    tavern placed his interest in the tavern proceeds at 62.96%. This left Edith's interest at 37.04%. To start, Ralph issued the judgment note for $54,947.38 in August 1971. Interest to October 1972 raised the note's value to $58,793.69. From this figure the court deducted $13,110.65 as Ralph's 62.96% interest in the $20,823.77 check from the sale of the tavern. This reduced Ralph's balance to $45,683.04 as of October 1974. Interest to December 1976 raised Ralph's liability by $11,420.76 to $57,103.80. The trial court next deducted the following three sums: $23,750.00 as Ralph's one-half interest in the marital property, $2,378.52 as one-half the value of the six monthly payments jointly received, and $17,471.02 as Ralph's 62.96% in the thirty-five monthly payments received by Edith to December 1976. These three deductions amounted to $43,599.54, and reduced the balance to $13,504.26 as of December 1976. After adding $742.72 for interest to November 1977, the court deducted $4,991.72 as Ralph's 62.96% interest in the ten monthly payments ...


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